- Silver price remains on edge as traders brace for the US NFP data for October.
- Lower US Initial Jobless Claims data signaled an improvement in job demand.
- The US Dollar resumes its upside journey after a corrective move.
Silver price (XAG/USD) adds little gains in European trading hours on Friday after plunging to near $32.50 on Thursday. The white metal faced sharp selling pressure after the release of the United States (US) Initial Jobless Claims data for the week ending October 25, which came in lowest in almost 22 weeks.
The US Department of Labor showed that individuals claiming jobless benefits for the first time were 216K, lower than estimates of 230K and the former reading of 228K. A slowdown in the jobless claims’ growth pointed to an improving labor demand environment. On Wednesday, the ADP Employment Change data also showed a strong labor requirement in the private sector. The agency reported that 233K workers were hired by the private sector in October, significantly higher than 159K in September.
Meanwhile, the US Dollar Index (DXY), which gauges Greenback’s value against six major currencies, rebounds strongly to 104.10 after a corrective move to 103.80. 10-year US Treasury yields climb to near 4.30%.
For more interest rate cues, investors await the US Nonfarm Payrolls (NFP) data for October, which will be published at 12:30 GMT. The NFP report is expected to show that the economy added 113K new workers, significantly less than 254K in September. Economists expect the Unemployment Rate to have remained steady at 4.1%. The NFP data will significantly influence market expectations for the Federal Reserve (Fed) interest rate cut path.
Silver technical analysis
Silver price extends its correction to near the key horizontal support plotted from the May 20 high of $32.50 on a daily timeframe. The white metal finds a temporary cushion near the 20-day Exponential Moving Average (EMA), which trades at around $32.80.
The 14-day Relative Strength Index (RSI) falls inside the 40.00-60.00 range, suggesting that a bullish momentum is over for now, however, the bullish trend remains intact.
Silver daily chart
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD stays depressed below 0.6200, awaits US CPI for fresh impetus
AUD/USD struggles to capitalize on its recent recovery gains while trading in the red below 0.6200 as traders opt to wait for the US CPI data before placing fresh directional bets. In the meantime, markets remain cautious and help limit the US Dollar pullback from over a two-year peak.
USD/JPY holds steady near 158.00, as focus shifts to US CPI
USD/JPY oscillates in a range near 158.00 in the Asian session on Wednesday amid subdued US Dollar price action and ahead of the crucial US CPI report. The downside remains cushioned amid wavering BoJ rate hike expectations. Further, prospects for fewer Fed rate cuts favor the US Dollar, supporting the pair.
Gold buyers turn cautious ahead of US CPI inflation test
Gold price returns to the red early Wednesday as buyers switch to the sidelines, awaiting the US Consumer Price Index data release for further insights on the Federal Reserve’s interest rate path.
Bitcoin could lose its diversification status as correlation with stocks increases
Bitcoin's rising correlation with the traditional stock market is gradually affecting its role as a portfolio diversifier. This trend has been visible following Bitcoin's similar reactions to the S&P 500 upon macroeconomic data releases.
Small business optimism shoots up in December
Small business sentiment continued to improve in December alongside greater economic and public policy certainty. The NFIB Small Business Optimism Index rose 3.4 points to 105.1, reaching its highest level since October 2018.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.